Financial Data and Key Metrics Changes - Total investment income for Q2 2024 was $36.5 million, a 33% increase from $27.4 million in the prior year [24] - Net investment income for Q2 2024 was $15.8 million or $0.48 per share, compared to $14.2 million or $0.56 per share for the same period last year [24] - NAV per share decreased to $16.85 from $17.16 at the end of Q1 2024 [25] Business Line Data and Key Metrics Changes - The total investment portfolio as of June 30, 2024, had a fair value of approximately $1.43 billion, reflecting a sequential growth of approximately 3% from $1.39 billion at the end of Q1 2024 [16] - The company deployed $189 million of capital in Q2 2024, including 24 new investment commitments [16] - The portfolio is 96% Senior Secured with an average hold size of approximately $6 million [19] Market Data and Key Metrics Changes - Bank loans returned 1.7% during Q2 2024, bringing the year-to-date return to 4.1% [11] - PSBD returned approximately 7.5% year-to-date through July 2024 [11] - The CLO market had a record year with $243 billion issued in the U.S. and $41 billion in Europe as of July 31, 2024 [8] Company Strategy and Development Direction - The company focuses on an opportunistic credit investment strategy, allowing it to invest across liquid and private markets [7] - The strategy emphasizes maintaining exceptional credit quality while seeking to capitalize on market opportunities [6] - The company aims to maintain strong credit quality and avoid adding meaningful risk in the current market environment [14] Management's Comments on Operating Environment and Future Outlook - The U.S. economy has shown signs of modest slowing, with the labor market beginning to show fatigue [10] - Management remains cautiously optimistic about the potential for new borrowers entering the market in the second half of the year [31] - The company is focused on maintaining discipline in investment decisions amid a borrower-friendly environment [13] Other Important Information - The company repurchased 21,352 shares at an average price of $16.22 during Q2 2024 [26] - The Board of Directors declared a third quarter 2024 base dividend of $0.42 per share [26] - PIK income as a percentage of overall net investment income remains low at approximately 0.5% [22] Q&A Session Summary Question: Can you elaborate on the thought process behind the investments sold within the portfolio? - The majority of sales were due to refinancing and spread tightening, where some loans did not meet the required yield [29] Question: What are the latest thoughts on the attractiveness of primary versus secondary loan markets? - The majority of new investments were refinancing transactions, with cautious optimism for new borrowers in the latter half of the year [31] Question: How are covenant and collateral packages trending in recent transactions? - There has been more lender-friendly terms recently, but it is too early to determine the long-term impact [34] Question: Can you clarify the realized gains and unrealized gains in the portfolio this quarter? - Some loans were marked above par due to strong performance, and when repaid at par, it led to a reversal of unrealized gains [37]
Palmer Square Capital BDC(PSBD) - 2024 Q2 - Earnings Call Transcript